Compound Interest Calculator
Estimate future investment growth with monthly contributions, annual return rate, and yearly compounding breakdown.
How It Works & Methodology
Compound interest is interest calculated on the initial principal as well as the accumulated interest from previous periods. Regular periodic contributions accelerate growth due to the compounding multiplier over longer time horizons.
Key Assumptions & Scope:
- Interest is compounded monthly; monthly contributions are deposited at the end of each month.
- Rate of return is assumed constant and reinvested without tax or inflation adjustments.
Frequently Asked Questions
What is the benefit of monthly compounding over annual compounding?
Monthly compounding credits accrued interest 12 times per year rather than once, allowing subsequent interest calculations to build upon a faster-growing balance.
How do monthly contributions impact final wealth?
Consistent monthly deposits compound dramatically over multi-year horizons, often providing the majority of the portfolio value in the later years.
Are taxes or inflation included?
No. The calculator illustrates nominal pre-tax investment growth. Real returns should account for inflation and capital gains taxes.